6 Things You Need to Know About the Woman Who May Soon Be the Most Powerful Economist on Earth
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With Larry Summers knocked out of the running for Federal Reserve chair, attention has turned to Janet Yellen, considered his main rival for the job. So far, what most Americans know about her is that she is not Larry Summers, which is no small point. Summers is a crony capitalist with strong ties to Wall Street, a history of poor judgment and multiple conflicts of interest that make him uniquely unsuited to lead the Fed. That he will not should be a relief to all.
But who is Yellen in her own right? Let’s take a look at the woman who could end up becoming the most powerful economist on the planet.
1. Yellen has an impressive resume.
Janet Yellen grew up in Brooklyn, where her dad was a doctor. She got a bachelor's degree in economics from Brown University, followed by a Ph.D. in economics from Yale University where she studied with Nobel laureate and progressive icon Joseph Stiglitz. Her professor recently praised her in a New York Times op-ed, “ Why Janet Yellen, Not Larry Summers, Should Lead the Fed” as “one of the best students I have had, in 47 years of teaching at Columbia, Princeton, Stanford, Yale, M.I.T. and Oxford.”
Yellen has taught at Harvard (1971-'76) and the London School of Economics and Political Science (1978-'80). Since 1980, she has been a faculty member at Berkeley. As a scholar, Yellen has written on a wide spectrum of macroeconomic topics, but her specialty is the causes, mechanisms and implications of unemployment.
She joined the Federal Reserve board of governors in 1994, where, as a little-known economist, she talked down Alan Greenspan in a July 1996 meeting, arguing the Keynesian view that a little inflation would soften the blow of recessions and make them less severe. That would not be the last time she challenged a man whose views were often accepted unquestioningly by people across the political spectrum.
In Feburary 1997, Yellen succeeded Stigltiz as chair of the President’s Council of Economic Advisers under Clinton, where she served until August 1999. Later, she became president of the Federal Reserve Bank of San Francisco, from 2004-2010. In April 2010 she took over the Fed’s #2 slot as vice-chair.
A 67-year-old woman with snow-white hair and a cheerful demeanor, Yellen has kept a low profile, but interviews reveal a personality that is accessible and likable. When she joined the board of the Federal Reserve governors in 1994, for example, she raised eyebrows by eating in the cafeteria along with regular staff. She is married to progressive economist and Nobel laureate George Akerlof, who teaches at Berkeley and is famous for his contemptuous view of the neoclassical “rational markets” myth. (His most famous paper is “ Market for Lemons,” which explains how consumers get screwed in the marketplace). As progressive economist Paul Davidson recently pointed out, Yellen shares many of her husband’s views and often collaborates with him on research papers. She and her husband are avid stamp collectors, and apparently like to get nerdy by bringing along a suitcase full of economic books on beach vacations with their son Robert.
2. She has an independent streak.
Yellen’s stint in the Clinton administration has recently come under scrutiny, and that’s as it should be. Huffington Post’s Zach Carter revisited her 1997 Senate confirmation hearings and noted that at the time, she supported the repeal of Glass-Steagall, NAFTA and chained-CPI, an adjustment to the calculation of Social Security payments that amounts to a cut. It is true that Yellen supported the positions of the Clinton administrations at the time, and many of these positions are understandably unsettling to progressives. However, one has to look at the context and compare Yellen’s relatively tepid endorsement of deregulation to the relentless cheerleading of someone like Summers. In an email to me, Dean Baker explained: